Goodbye, HTC

Things haven't been going so hot for Taiwanese smartphone OEM HTC lately. Unfortunately for the aspiring turnaround candidate, things are getting worse before they get better.

The company's One smartphone is tasked with driving HTC's turnaround. All other considerations aside, the flagship device looks like quite a contender with its Apple-caliber hardware and revamped software overlay. The tough part thus far has been getting the device in consumers' hands, since HTC component shortages caused the company to delay the One's launch.

STMicroelectronics (NYSE: STM  ) and OmniVision (NASDAQ: OVTI  ) are the two camera suppliers, and HTC is reportedly no longer considered a "tier one" manufacturer so it doesn't get priority any more. That implies that one of these image sensor specialists was giving HTC the cold shoulder in favor of bigger names.

Marketing matters
Samsung has simply buried HTC in a marketing avalanche that HTC can't keep up with, even if HTC's products are higher quality. HTC had vowed to ditch its "Quietly Brilliant" tag line in an effort to shift toward louder marketing. That was nearly a month ago, and that modest motto is still prominently displayed on its site.

Some of HTC's ads last year had rather convoluted messaging, but its most recent marketing push is even worse. The company commissioned Funny or Die to create a parody ad for its One, starring James Van Der Beek of Dawson's Creek fame. Following widespread derision, the clip was quietly taken down. Copies were floating around on YouTube but have been suppressed by Funny or Die on copyright grounds. It was a terrible attempt, and HTC should feel embarrassed.

When being social isn't special
HTC is Facebook's (NASDAQ: FB  ) first official partner with its new Home software suite, recently launching the HTC First. However, that's a mid-range phone and Home is hardly a differentiating feature since the social network is targeting a broad audience and Home is available for download in Google Play for a select number of devices.

Partnering with Facebook could pay small dividends, but nothing substantial enough to save the company.

The final straw?
Most recently, Nokia (NYSE: NOK  ) has scored a preliminary injunction against HTC in the Netherlands over a microphone component inside the One. At issue is STMicroelectronics providing HTC certain microphone components for the One -- components that were invented by and manufactured exclusively for Nokia.

The Finnish smartphone maker said it was just the latest in a long string of cases where HTC was using Nokia technology without consent, citing over 40 patents that Nokia has asserted against HTC throughout the world.

HTC said it's still looking into how big of an impact this could have on its business and is exploring "alternative solutions immediately." While STMicroelectronics is headquartered in Switzerland, it is organized under the laws of The Netherlands, which suggests that this injunction could potentially be a major blow to the One. HTC could overcome the setback, possibly by switching components, but that may cause even further delays, and this could be the final straw when considered alongside the other recent fumbles.

Farewell
Everything is going wrong for HTC right now. Even after acknowledging the importance of marketing, the company is already making missteps. The component supply chain isn't giving HTC any respect and is also now a battleground where rivals are trying to stifle its access to crucial ingredients.

CEO and founder Peter Chou said in March that he would step down if the One failed to turn the tide. I would have liked to see HTC mount a turnaround on the strength of a high-quality device like the One, which is garnering impressive reviews from the broader tech press. Sadly, quality products aren't enough. Marketing and supply chain management are just as -- if not more -- important.

Goodbye, HTC.

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Read/Post Comments (13) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 24, 2013, at 11:16 PM, jeffreber44 wrote:

    Seems like Nokia finally had enough with others stealing their technology and is starting to sue. Wondering what will happen with the lawsuit filed against google for tethering. That could be a huge setback for android if Nokia wins.

  • Report this Comment On April 25, 2013, at 1:30 AM, tkeracer619 wrote:

    This is a joke. One more reason I am done with yahoo. They constantly come here with these paid for ads. If you didn't notice they are paid advertisers for apple and facebook. Of course they are going to put down HTC anytime they get a chance. Motley fools is nothing more then a shill. They are an advertising company disguised as a news source.

    I finally made an account to post this. Doubt it makes it through. Doesn't change the fact that the motley fool and yahoo are a joke.

  • Report this Comment On April 25, 2013, at 1:54 AM, mikoollowrentow wrote:

    I've had many brand name phones and by FAR, HTC is the best. I now have an HTC One-X and I love it! They will get through this.

  • Report this Comment On April 25, 2013, at 2:49 AM, yahoouser4529 wrote:

    HTC makes very high quality devices. I totally disagree with this article. HTC butterfly for instance is a very high end phone, much more superior than the galaxy note ii. I have HTC tablet for android and its been abused a lot but still works perfectly.

  • Report this Comment On April 25, 2013, at 3:29 AM, AlexzGreat wrote:

    In a nutshell this article says HTC is making good phones but lacks marketing skills.

    I'll rather buy a well engineered product than a well marketed one.

  • Report this Comment On April 25, 2013, at 8:10 AM, OutdoorPhotoMan wrote:

    Here is yet another bunch of Apple worshipers posing as news reporters in order to drive their AAPL stocks higher. Yes folks, Motley Fool owns quite a bit of AAPL, and their news is NOT "Spin Free" as they proclaim.

    Get with the times, Fool. Apple had it's 15 minutes of fame, and the Emperor has no clothes. iFans are leaving the party in droves.

  • Report this Comment On April 25, 2013, at 8:18 AM, PaulMcD123 wrote:

    Apple & Samsung hold over 80% of the market. That leaves HTC, Nokia, and all the others to fight over their single-digit percentages. That doesn't imply they will fail - just that they have little chance of becoming anything but a bit player in this market.

  • Report this Comment On April 25, 2013, at 8:57 AM, rclines01 wrote:

    Good riddance. They make crap anyway. Nothing but problems with my HTC One X since I got it. In 8 months, I have had to waranty it 6 times. Be gone trash maker.

  • Report this Comment On April 25, 2013, at 8:58 AM, CalvinballPro wrote:

    My only question about the HTC One is "When can I get it on a decent carrier?" I've had one smartphone, an HTC Eris, but I've seen and used friends' iPhones and Samsungs, and based on that, HTC is the brand I prefer. As others have mentioned, some stock-obsessed writers use their platforms to try to damage the brands of their preferred stocks' rivals, as the majority of tech publications do for their preferred brands. Non-Apple products rarely get a fair or unbiased review.

  • Report this Comment On April 25, 2013, at 9:49 AM, tkeracer619 wrote:

    Samsungs problem is they can put together some awesome hardware then destroy it with their software department. Not to mention they have so many suppliers for their componenets that you never know what you are going to get. The last time they sold 10 million of the same phone they had 7 different gps radios used and the stock firmware did a horrible job interfacing with the different units. This results in you doing 70mph, backwards, and one block over.

    HTCs problem is audio, which the one apparently fixed.

    Apples problem is Steve Jobs is dead leaving the vultures ready to pick the flesh. They want a piece of what Jobs had without having the smarts he had. Apple will be back to pre iphone days within 10 years as their phones and tablets fall behind. Microsoft will rebound from crappy 8 just like they did with vista and win 2000.

    Hope i'm wrong but that is the way it seems to be going these days. What I am not wrong about is motley fools motivations for writing stupid articles like this. A lot of simple minded folk out there who can't see through your articles even though you put disclaimers in them. I love how you lead up with "Spin free" then follow up with a disclaimer that says you "~are invested in their competition".

  • Report this Comment On April 25, 2013, at 9:53 AM, tkeracer619 wrote:

    Calvin? T Mobile has the One.

    My monthly bill with Tmobile is $55 a month (including insurance).

  • Report this Comment On April 25, 2013, at 12:05 PM, jwarr3000 wrote:

    I completely disagree with this article. I have the HTC DNA and it's the best phone I've ever had. As someone metioned above, I'd rather have a high quality device than a better marketed one...

  • Report this Comment On April 25, 2013, at 10:20 PM, algiyu wrote:

    Everyone knows HTC is blatant ripped off of Samsung Galaxy line

    Look at their DESIGNS, Screen Sizes to features~

    HTC has no shame to continue to copycatting Galaxy products. Typical notorious Chinese copycat !!!!!!!!!

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